Dismissal of claim for avoidance of approx. DKK 100m against Thornico

In May 2021, two estates in bankruptcy instituted legal proceedings against Thornico Holding A/S and Thornico A/S ("Thornico") for payment of approx. DKK 100m in total plus statutory interest.

The estates in bankruptcy believed that Thornico had failed to settle joint taxation contributions in accordance with section 31(8) of the Danish Corporation Tax Act for four years prior to the bankruptcy and, if the joint taxation contributions had been paid, that the settlements were voidable under the rules of the Danish Bankruptcy Act.

Thornico, which had financed the two bankrupt shipping companies on an ongoing basis through the years, believed that all joint taxation contributions had been settled by write-down of intercompany debt and claimed dismissal of the case.

Joint taxation is statutory and mandatory. It is stated in section 31(8) of the Danish Corporation Tax Act that in case of use of losses in group companies, an amount equal to the tax value of the tax use (joint taxation contribution) is paid to the company which does not use the loss itself. A consolidated company may assume the management company's payment obligations.

It is disputed whether the management company (Thornico Holding A/S) - or the consolidated company which had assumed the payment obligation (Thornico A/S) - could settle joint taxation contributions to the loss-making company (the now bankrupt company) by write-down of the loss-making company's balance (debt). 

The court found that settlement of joint taxation contributions may take place by write-down of intercompany accounts, see section 31(8) of the Danish Corporation Tax Act.

The group had for several years settled joint taxation by write-downs in intercompany accounts. The court found that the method of settlement should be considered accepted by the companies, and that there was no reason to assume that the approach was not in accordance with the general legal principles of the law of obligations.

Accordingly, the court found that the joint taxation contributions for the years in question had been settled.

Further, the court found that payment of the joint taxation contributions by way of debt write-down by way of intercompany accounts appeared to be ordinary commercial transactions.

The court found that it was not evident until just before the bankruptcy in May 2020 that continued operation of the two now bankrupt companies was not possible. The court was not satisfied that the two now bankrupt companies were or became insolvent due to the entries concerning payment of debts by way of the joint taxation contributions in the intercompany accounts.

Accordingly, the conditions for avoidance in sections 64, 67, 69, 72 or 74 of the Danish Bankruptcy Act were not met.

The District Court in Odense unanimously dismissed the claims raised against Thornico Holding A/S and Thornico A/S.

Thornico Holding A/S and Thornico A/S were awarded legal costs of DKK 3m in total.

Plesner represented Thornico Holding A/S and Thornico A/S.

Plesner's team included attorneys Christian Th. Kjølbye, Peter Bang, Michala Roepstorff and Anine Severin.